FEMSA (FMX) Q4 Earnings Miss Estimates, Revenues Surpass

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Fomento Economico Mexicano S.A.B. de C.V. FMX, alias FEMSA, reported fourth-quarter 2023 net majority earnings per ADS of 64 cents (Ps. 0.91 per FEMSA unit). The company posted adjusted net majority earnings per ADS of $1.07, missing the Zacks Consensus Estimate of $1.41.Net consolidated income was Ps. 6,337 million (US$375 million), reflecting a 20.7% decrease from the year-ago quarter.Total revenues were $11,232 million (Ps. 189,825 million), which improved 4.6% year over year in the local currency. Revenues in U.S. dollars beat the Zacks Consensus Estimate of $11,215 million. Revenue growth was driven by gains across FMX’s business units. On an organic basis, total revenues rose 4.3%.Shares of the Zacks Rank #1 (Strong Buy) company have advanced 28% in the past year compared with the industry’s growth of 6%.FEMSA’s gross profit rose 8.5% year over year to Ps. 77,915 million (US$4,610.4 million). The consolidated gross margin expanded 140 basis points (bps) to 41%, owing to the gross margin expansion at Proximity Americas, Fuel and Coca-Cola FEMSA. Growth was partly negated by margin declines in Health and Proximity Europe.The company’s gross margin expanded 120 bps at Proximity Americas, 20 bps at Fuel and 190 bps at the Coca-Cola FEMSA segments. However, the gross margin contracted 110 and 200 bps in the Health and Proximity Europe segments, respectively.FEMSA’s operating income (income from operations) was down 1.4% year over year to Ps. 17,532 million (US$1,037.4 million). On an organic basis, operating income dipped 0.7%. The consolidated operating margin contracted 60 bps to 9.2%, driven by margin contractions at the Coca-Cola FEMSA, Proximity Americas and Health divisions. The gains were partly offset by margin expansions at the Fuel and Proximity Europe division.Fomento Economico Mexicano S.A.B. de C.V. Price, Consensus and EPS SurpriseFomento Economico Mexicano S.A.B. de C.V. price-consensus-eps-surprise-chart | Fomento Economico Mexicano S.A.B. de C.V. QuoteSegmental DiscussionProximity Americas: Total revenues for the segment rose 14.2% year over year to Ps. 71,530 million (US$4,232.6 million). The increase can primarily be attributed to an 8.5% rise in same-store sales on 2.1% growth in store traffic and a 6.3% rise in average ticket. The gains mainly stemmed from robust growth across the OXXO categories due to the rising demand for thirst a...

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